Range estimates it acquired 205 Bcfe of net proved reserves in the transaction. Approximately half the value is attributable to royalty interests. The reserves are 99% natural gas, 80% coalbed methane and have more than a 20-year reserve life index. The purchase added approximately 14.8 Mmcfe a day to Range's production and increased its leasehold position by 417,000 acres. On 373,000 mineral acres, interests include both a royalty and a working interest. The acquisition cost equates to $1.07 per mcfe of proved reserves assuming no allocation of the purchase price to undeveloped leasehold. Range believes that the acquired properties also have significant additional reserve potential as proved reserves have been assigned to only 30% of the acreage. The acquisition increased Range's proved reserves to nearly 1.2 Tcfe, raised its production to 225 Mmcfe a day and lengthened its reserve life index to 15 years. As a result of the acquisition, Range has increased its production growth guidance for 2005 to 20%.
Range also announced that the underwriters have elected to exercise the full 15% overallotment option with regard to its recent common stock offering. The acquisition will be funded with the $103 million of net proceeds from the common stock offering and from bank borrowings. In concert with the transaction, the borrowing base under Range's bank credit facility was increased to $575 million. Upon closing the acquisition and the stock offering, the available liquidity under the bank facility will be approximately $140 million.
Commenting, John H. Pinkerton, the Company's President said, "Acquiring these reserves, which are 80% coalbed methane, was an attractive transaction for Range. We purchased a substantial volume of high-margin, long-life natural gas reserves in properties where we own both a royalty interest and a working interest. Furthermore, there are significant opportunities to enhance the value of these assets given the large property base covering 417,000 acres. The properties' royalty component and high margins will immediately benefit our shareholders. Their long reserve life and exceptional development potential indicate the benefits of the acquisition should extend for many years to come. Importantly, the transaction fits well within our balanced strategy of growth through the drill bit and complementary acquisitions."
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